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2021 (12) TMI 607 - AAR - GSTClassification of services - activity of surface coating undertaken by the Applicant in the State of Maharashtra on original/new goods received from Customer - classifiable under service accounting code 9988 more specifically under code 998898 as job work activity chargeable to tax at 12% in terms of entry no. 26(id) of Notification 11/2017 Central Tax (Rate) as amended or at 18% in terms of entry no. 26(1v) of Notification no. 11/2017 - HELD THAT:- Since no new product comes into existence after the process conducted by the applicant on the goods supplied by its principals, therefore the process undertaken will come under the purview of job work as defined under Section 2 (68) of the CGST Act, 2017. Thus, the applicant is only a job worker to the OEMs and as a job worker, carries out processes on goods supplied by its principals - the impugned services supplied by the applicant are in the nature of job work. The said services do not fall under entries at items (i), (ia), (ib) and (ic) above. Therefore the subject supply of services will be covered by the residuary entry at item (id) of the said notification, namely, Services by way of job work other than (i), (ia), (ib) and (ic) above. Hon’ble Supreme court in the case of M/S. MARUTI SUZUKI INDIA LTD. VERSUS COMMNR. OF CENTRAL EXCISE [2015 (3) TMI 784 - SUPREME COURT] has also held that there is a distinction between processing and manufacture and that Electro Deposition (ED) Coating of anti-rust treatment to increase shell life of various component is merely a processing activity and not a complete manufacturing activity. The impugned services supplied by the applicant are in the nature of job work services, classifiable under Entry at item (id) under heading 9988 of Notification No.11/2017-Central Tax Rate dated 28.06.2017 as amended. Coating services on old, worn out or used goods received from end users - HELD THAT:- Applicant receives old and worn out goods from its customers who have actually used the said goods and such use has resulted in wear and tear. The applicant has restored the old or damaged goods into good condition and also improved the functionality of the said goods, by the impugned activities. As per section 2 (68) of the CGST Act, 2017 job work means, ‘any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly’. Thus Job work is a processing or working upon raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the afore-mentioned process. In the subject case, old, worn out cutting tools and components/goods are converted into reusable cutting tools and components /goods. The old worn out cutting tools and components/goods are not a distinct commodity from serviceable cutting tools components/goods, only that they were rendered unusable only because of wear and tear over a period of prolonged use. When the old and worn out goods are repaired, no new commercial commodity comes into being, rather it remains a cutting tool/component but now it can be reused. An example would be of a Television Set which has stopped working due to certain reasons like, failure of a circuit, etc. When such a Television set is taken up for correcting the deficiency in order to make it workable, it cannot be said that the concerned mechanic has manufactured a new Television or has conducted job work which has resulted in the production of a new Television. The subject activity undertaken on old and worn out goods received from the end users is an activity of repair and squarely falls under SAC 9987 and will attract 18% GST under Entry No. 25(ii) of Notification No. 11/2017 dated 28.06.2017, as amended - the coating services on the old and worn out goods like cutting tools and components is an activity of repair and squarely falls under SAC 9987. The coating services on old and worn out goods supplied by end users are not an activity as outsourced portions of a manufacturing process or a complete outsourced manufacturing process and therefore, the impugned activity does not fall under SAC 998873. Coating services on new tools received from end users - HELD THAT:- With respect to old, used or worn out goods, the applicant has submitted that the said goods are not sent by the Customers for carrying out any part of the process of manufacturing but instead to restore the functionality of the old and worn out tools and make them reusable for such Customers. Thus it appears that such goods are sent by the end users. The applicant has not submitted details of new goods received from end users, if any, for coating services to be carried out - the semi finished/new/original goods are received only from tool manufacturers and not from end users and therefore we do not take up the issue of “coating services on new tools received from end users for further discussion.
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